Shell exploration plans in Alaska stoking concern, hope in Canada

CALGARY – Royal Dutch Shell’s plans to explore for oil off Alaska’s northwestern coast are being closely watched in Canada with a mixture of hope and concern.

Earlier this week, the energy giant cleared a major hurdle when the U.S. Bureau of Ocean Energy Management approved a multi-year exploration plan in the Chukchi Sea, though it still needs to obtain other federal and state permits.

Shell isn’t active in the Canadian Arctic these days, but both proponents and critics say the U.S. decision has implications for Canada.

“It’s a good signal from where we sit,” said David Ramsay, the Northwest Territories minister in charge of resource development.

“The resource in the Beaufort could rival the Gulf of Mexico. We want to ensure it’s done right and I think that’s why folks are watching this closely.”

Ramsay said he was encouraged by the way in which Shell has been partnering with indigenous-run businesses in Alaska, and imagines it would work much the same way in his territory.

Doug Matthews, an energy consultant who works in the North, said a past effort by Shell to drill in the Arctic does not inspire confidence. On New Year’s Eve 2012, its drilling ship, the Kulluk, ran aground in a severe Alaska storm.

“I would worry that if they had another incident in the Chukchi program, that would really inflame public opposition to any Arctic drilling,” said Matthews.

“I’m comfortable with our regulatory regime in the Beaufort through the National Energy Board, but I worry that a miscue on the part of Shell could result in a real Arctic drilling chill for years to come. That’s what troubles me the most.”

Environmental groups are enraged by the U.S. approval and have been planning big protests in Seattle, where Shell wants to keep its drilling equipment before it heads north.

“This is really, really bad news and it’s outrageous that they can go ahead in spite of massive opposition,” Greenpeace spokesman Diego Creimer said from aboard the Esperanza, one of the environmental group’s ships that’s currently docked in North Vancouver.

Greenpeace protesters aboard the Esperanza targeted an Arctic-bound Shell drilling vessel earlier last month as it made its way across the Pacific Ocean.

One big concern on the West Coast of Canada and the U.S. is the increased tanker traffic that could result from exploiting Arctic oil — a big factor in the debate over Alberta-to-B.C. crude pipelines like Northern Gateway and the Trans Mountain expansion, said Creimer.

In an emailed statement, Shell said the approval shows regulators have confidence in its revised Chukchi Sea exploration plan.

“However, before operations can begin this summer, it’s imperative that the remainder of our permits be practical, and delivered in a timely manner,” it said.

“In the meantime, we will continue to test and prepare our contractors, assets and contingency plans against the high bar stakeholders and regulators expect of an Arctic operator.”